Contractor and IR 35 – When does it apply to you?
Contractor and IR 35 When does it apply to you? As Albert Einstein said on his taxes ..’this is too difficult for a mathematician. It takes a philosopher’. I would agree with Albert Einstein when I got to know that there are off payroll working rules existed but luckily we have accountants today to help sort out our accounts and taxes. We at Taxaccolega are not philosophers but a team of accountants who can help you with your income taxes, tax returns, payment on accounts. If you are contractor and have an income of more than £1000 per year you will have to fill in self- assessment tax return and pay income taxes. Establishing if you are a contractor or an employee is very important. It will determine if you are within IR35 or outside IR35. WHAT DOES IT MEAN TO BE INSIDE IR 35 AND OUTSIDE IR 35? Being inside IR 35 means that HMRC sees you as an employee of the company and you have to pay taxes accordingly through deemed employment payment.Being outside IR 35 means that you are considered as a self- employed. HOW DOES IT AFFECT YOUR TAXES? If you are inside IR 35, you are considered an employee for tax purposes. You will have to pay income tax and NI like an employee. There is an advantage as well, if your contract is inside IR 35 you will be entitled to maternity pay, sick pay, furlough payments etc. This If your contract is outside IR 35, you can pay your taxes efficiently. You can pay yourself and pay taxes in a tax efficient way. If you are working as an self-employed the tax paid can be saved around 20% or more depending on the income that you have. WHAT DOES IT MEAN TO BE A CONTRACTOR? You are a contractor if the you are carry out some work for a company or an individual. A contractor will typically have some specialized skills such as an IT software designer and he will be working as a self- employed business. If you are a contractor the following will apply to you: ● You will be defining your own work schedule of work ● You cannot send a substitute for yourself to work that was assigned to you. ● You are not expected to be given work by the client and you are not obliged to accept it. ● You can work on more than one clients at a time ● You can advertise yourself actively even while you are working for a client. ● You use our own equipment and work space ● You are paid according to your job done and its not necessarily fixed. UNDER WHAT STRUCTURES DO CONTRACTORS WORK? Contractors can work as self employed and sometimes they work through an intermediary. This intermediary is often a limited company, however, according to HMRC website it could also be a partnership, a personal service company or an individual. If a contractor is providing a service through an intermediary, and their contract with their client is such that they would be considered an ’employee’ if they had not been working through the intermediary. HMRC wants to make sure that they are paying ‘ broadly’ the same amount of tax and NI as other employees and hence the introduction of IR 35 or off payroll working rules. To calculate deemed employment tax check the HMRC website here It is very important that you have know exactly what kind of services you are providing and if your contract is in IR35 or out of IR35. If HMRC finds out that you were supposed to be paying income tax and NI as an employee, you will have to pay back to HMRC. The rules and the calculations can get a little complicated, if you need help in understanding or implementing IR 35 just call Taxaccolega accountants at 020 8127 0728. Accountants based in Surrey and Croydon are available at affordable prices to help you with your taxes and other accounting services such as VAT. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Social Influencer – Will I be taxed?
Social Influencer – Will I be taxed? Sitting home and making money couldn’t get any easier as it has now. We have seen lots of success stories of people around us who are making so much money through social media that they have quit their jobs. It is a dream job for many as they can just peruse their hobby such as travel, wood work etc and make money by sharing their experiences. By the sound of it, it seems that its just a hobby that is being pursued however, in reality the more you are getting noticed by the people around you the more chances are that your income will be scrutinised by the HMRC. As I always say , when you have money coming in you will have to pay taxes. If you are doing some activity through which you are earning money and you are spending some money so that you are able to do that activity HMRC will consider it a business and you will be liable to pay taxes. It is always a good idea to get in touch with an accountant who can advise you on taxes in this area so you are not worried about getting a penalty from HMRC for not reporting your income. HOW DO I REPORT MY INCOME You will have to report your income from social media such as YouTube on the self-assessment tax return. If you have income of more than £1000 in a single tax year you will have to register for self-assessment tax return by 5 Oct and fill in the self- assessment tax return and file it by 31 Jan of the following year. See our blog here to understand the deadlines. You can register for self-assessment as self-employed online by following the link here HOW MUCH TAX WILL I BE PAYING? How much tax you will be paying will depend on the income that you are earning. When you are a social influencer such as a you tuber, its not always your main job. For example, you might have a stable job on which you are paying taxes and you are just uploading videos. The extra money that you are making is more than £ 1000 per year. In that case you although you might be paying your taxes at source, meaning your employer has deducted the tax and NI before paying you the salary. You are required to state your salary in your self-assessment tax return form as shown in your P60. This would also mean that you might have utilised your tax free personal allowance which is currently £ 12 500 and is set to increase to £ 12 570. You will be paying taxes according to the tax brackets in which your income falls. To learn more about the tax thresholds click here. CAN I CLAIM ANY EXPENSES? Yes, very confidently. If you are ready to declare all your income and pay taxes on it you can claim any expenses from HMRC as well. Claiming expenses mean that you will be. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *